International Relations Project Topics

Crowdfunding Potentials in Developing Countries With Nigeria as a Case Study

Crowdfunding Potentials in Developing Countries With Nigeria as a Case Study

Crowdfunding Potentials in Developing Countries With Nigeria as a Case Study


Objectives of the study

The main objective of the study is to explore the Crowdfunding potentials in developing countries with Nigeria as a case study.

Specifically, the study sought to:

  1. Explore the concept of crowdfunding
  2. Examine crowdfunding potentials in Nigeria
  3. Examine the benefits and challenges of crowdfunding in Nigeria.
  4. Explore the future of crowdfunding in Nigeria.



Conceptual review

Concept of crowdfunding

The term ‘crowdfunding’ was introduced by Michael Sullivan, the founder of, an online social platform. He has an online social platform that involves simple blog funding features for listed projects; He defines funds from the “crowd” as the base on which everything else depends on (Villani, 2013). Crowdfunding is a method of raising external finance from a large number of people rather than a small group of specialised investors (e.g., venture capitalists, business angels, and banks) where each person provides a small sum of the funding raised (Lucia, 2015). Belletlamme et al. (2014) and Mollick (2013) define crowdfunding as the process of collecting small contributions from a large number of individuals instead of relying on one unit. According to Collins and Pierrakis (2012), crowdfunding is the “financing project or businesses with small contributions from a large number.”

Crowdfunding is a new funding or financing innovation available to entrepreneurs’ and creators of innovative ideas to raise money to fund specific projects for a predetermined reward. According to Huang, Chiu, Mo and Marjerison (2018), crowdfunding generally refers to obtaining funds of a small amount from many individuals or institutions via online platforms, which are used to provide funding for a certain project, business or personal loans, or other needs. The inefficiency of the traditional financial market has paved the way for modern funding models like crowdfunding financing. Real estate development industry has had its fair share of the effect of the inefficiency of the traditional financial market over the years. The quest for alternative ways of funding real estate development projects gave birth to Real Estate Crowdfunding financing model. Moulthon (2017) exerts that real estate crowdfunding (RECF) is a new and evolving investment vehicle that is disintermediating traditional capital markets.




Crowdfunding in Nigeria

Soreh (2017), crowdfunding is a new funding innovation available to entrepreneurs and creators of innovative ideas to raise money to fund projects for a predetermined reward. The new funding innovation is yet to penetrate the fabrics of entrepreneurial finance in Nigeria but with considerable acceptance in the USA, France, Netherlands, Britain, etc. Presently, crowdfunding campaigns for entrepreneurial activities in Nigeria is still evolving. Hence this study is conceived to scale the level of awareness and the people’s attitude regarding the concept.

In spite of crowdfunding successes as a funding approach elsewhere, the mechanism is penetrating into the country’s entrepreneurial finance at a snail speed. Presently, there is no existing database for crowdfunding activities in the country. There are no existing laws regulating its implementation for entrepreneurial activities in the country for now and not likely in the near future. This perhaps is the underlying reason that presently, social causes are the most successful crowdfunding campaigns in Nigeria. Virtually, most of the successful campaigns are to help the sick (health related). Instead of using established crowdfunding platforms or site, campaigners uses the electronic media, especially Television stations, with a designated bank account. A review of successful campaigns for entrepreneurial purposes reveals that one of such campaigns on one of the Nigerian-oriented sites was funded by the promoters of the platform.  Thereafter, there is no indication of other successful campaigns  for over four years leaving the first successful campaign a suspect. This does not mean that the concept is not workable in the country but triggers regulatory concerns, (Assenova, et. Al., 2016).

Nigeria is said to be a host of about Nine crowdfunding platforms with several listings on some the platforms, especially indigenous sites such as Imeela, Naturfund, Funmilowo, Donate-ng, but there is little or no evidence of successful funding for entrepreneurial activities. The one or two successful campaigns recorded for entrepreneurial activities in the country were listed on Kickstarter and Indiegogo; incidentally, the campaigners are not Nigerians.




This study was carried out on crowdfunding potentials in developing countries, with Nigeria as case study.

Crowdfunding is leading the democratization of innovation, entrepreneurship, and entrepreneurial finance by way of giving hope to people who otherwise would have no chance of seeking external funding, let alone having access to it. The funding approach provides an opportunity for new businesses and innovations and brings to a light new wave of investors. It is abundantly clear that there are several small and medium scale businesses and innovative ideas that can benefit from the crowdfunding space in Nigeria. Notwithstanding the type of crowdfunding model, a campaigner intends to adopt and the kind of business or idea it tends to finance, crowdfunding beat the conventional finance market as campaigners and backers are brought in contact directly. The development of the crowdfunding industry will ensure the emergence of reliable home-based crowdfunding platforms that would play a more active role as partners in the market and bring to existence models that seem not practicable in the country. Therefore, it will be more beneficial to start to expand research on entrepreneurial finance into crowdfunding. While acknowledging regulatory and other attendant constraints in the immediate implementation of the equity and peer-to-peer crowdfunding models, it would be detrimental to waste time without starting with donation-based and pre-order models that seem practicable. Crowdfunding awareness is key to its appraisal as alternative means of financing for SMEs and entrepreneur in Nigeria. Awareness means adequate information and better understanding of the crowdfunding concept, regulatory guide, process, benefit and risks associated with its implementation. This awareness is very important to both the fund seekers and investors. Human attitude toward crowdfunding is also germane to its implementation and acceptance. This could either be positive or negative. A positive behavioural attitude indicates acceptance whereas any form of negative attitude shows a sign that leads to rejection.


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